Senior partners of Andersen, the embattled accounting firm at the centre of the Enron scandal, are continuing their talks in London to find a replacement chief executive.

The firm has been rudderless since Joseph Berardino resigned a week ago, saying he was leaving in a bid to prevent the firm's collapse.

Talks on a replacement "may even continue until the end of the week," an Andersen spokesman said on Wednesday, as the meeting went into a second day.

On Tuesday Andersen admitted that attempts to merge its non-US operations with rival KPMG had failed because some of its regional units favoured alternative deals.

New leader sought

Andersen needs a new chief executive to lead attempts to rescue its US business.

The firm faces obstruction of justice charges in the US over the shredding of Enron-related documents by its Houston office after an investigation into the latter's collapse had begun.

The case goes to court in Houston on 6 May.

In the meantime, the bad publicity surrounding the case has led to many companies taking business away from Andersen.

The company has lost more than 100 US clients since the start of this year.

Another split?

Andersen's consulting arm, with revenues of $1.7bn last year, has become the latest part of the firm to say it does not see its future within KPMG.

"We never saw KPMG as a long term home," said Nick Owen, UK managing partner of Andersen Business Consulting (ABC).

"We are in the process globally of looking for our own solution."

ABC is "in active talks with 10 other companies" on a range of options including a global merger, local tie-ups, or bringing in fresh funds to support a separate business, a spokesman told BBC News Online.

He declined to name any of the companies involved in the talks, but said they include other audit firms and specialist consultancies.

Though the preferred option remains a global merger, "all the various country businesses are quite keen to keep at least a European partnership together," he said.

Global deal collapses

Andersen admitted on Tuesday that it has no chance of stitching together a worldwide merger with KPMG, after failing to persuade all its regional units to sign up to the deal.

"In view of the decisions by certain individual firms to pursue different directions, it is clear that a deal embracing all of the non-US firms is not achievable," Andersen Worldwide said in a statement.

It insisted, however, that talks between the two firms continued at a country level in various locations, but did not speculate on what sort of deal could be salvaged.

Andersen's Spanish partners, who make up of one of the firm's main European business units, opted on Tuesday for a tie up with rival accountancy firm Deloitte Touche Tohmatsu.

But other major European units in Germany and France have confirmed they remain on track to link with KPMG, and talks are making "substantial progress", the Wall Street Journal reported.

Asian Achilles heel

But in Asia, Andersen's Singapore business has agreed a merger with Ernst & Young, which has already picked up Australia, New Zealand and Russia as the KPMG merger unravelled.

Ernst & Young is reportedly in talks to add Andersen's operations in Malaysia, the Philippines and Taiwan to the list.

Asia has proved a sticking point for Andersen's deal with KPMG, which was originally intended to include all Andersen's businesses outside the United States.

Contractual difficulties make it look increasingly unlikely that Japanese staff will side with KPMG either, and Hong Kong and China operations are now talking to PricewaterhouseCoopers.